Feb 17, 2022 - Business

Popularity of built-to-rent homes spikes in Texas

Reproduced from RentCafe analysis of Yardi Matrix data; Map: Axios Visuals

Homes built for renting are having a moment.

Driving the news: The Austin metro ranks 13th nationally for the number of single-family rentals, with 1,390 such houses in built-to-rent communities as of 2021, a new report from RentCafe found.

  • Rental homes are becoming more popular than apartments, with about 90,000 existing single-family homes in built-to-rent communities and an occupancy rate of 97%; multifamily occupancy is at 95%.
  • At the city level, Austin boasts 760 built-to-rent houses.

Why it matters: Traditionally, homes are built to be sold, but the hot rental market means low finance rates, high demand and stable rental rates for investors.

  • Plus, the pandemic created unprecedented demand among renters for space and privacy, which many houses can address better than apartments, per RentCafe.

The Austin-Round Rock metro area this month experienced an overall decline in closed home sales compared to January 2021, according to the latest Austin Board of Realtors Central Texas Housing Report released Wednesday.

  • The number of closed listings fell 5.8% to 2,295.
  • In January, the metro area’s median sales price rose 30.4% to $476,000, a record for the month of January.

What they’re saying: "We need to make it easier to build homes across all price ranges in the region so that anyone who wants to own or rent a home has the opportunity to do so," said Austin Board of Realtors president Cord Shiflet.

  • Demand is higher than ever, yet supply chain issues are contributing to a slowed construction rate, driving up home prices and making it harder for builders to complete projects on time.
  • "It takes almost twice as long to build than it did pre-pandemic, so we are building less housing per year, despite our best efforts," added Scott Turner, president of the Home Builders Association of Greater Austin.

Zoom out: Statewide, the Houston and Dallas metros hold the highest number of single-family rentals. Dallas-Fort Worth boasts 4,290 — the third highest in the country. The Houston metro area follows with 3,600 rental units.

  • Local and statewide growth are part of a national trend. Last year marked a record year for family rental home construction, with 6,740 new built-to-rent homes.
  • And that's only going to continue to climb. Twice as many homes are under construction, with nearly 14,000 set to open their doors to renters this year, RentCafe found.

Of note: The data includes only properties defined as single-family homes for rent located in built-to-rent, professionally managed communities of more than 50 units.

The bottom line: Whether you’re renting or buying — news flash — it’s expensive and difficult to find a home in Central Texas.

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